by Mohamed T Gulamali
The USA Tax Laws are ever-changing, and this article includes 20 recent laws you should learn, and then remember.
1. These 20 Tax Laws were implemented with the 2018 tax season, however they will always be important.
2. Property Taxes: The maximum total that can be written off is $10,000 for the combination of property taxes + income & sales tax
3. Mortgage Interest Write-Off: The deduction has been lowered, now you can only deduct the first $750,000 of your mortgage interest. Home Equity Line mortgage interest will no longer be tax deductible on a primary residence unless the funds are used for renovations.
4. Capital Gains: This exclusion will remain the same at $250,000 for single people, and $500,000 for married couples. You have to live in the property for two of the last five years as your primary residence
5. Standard Deduction (this deduction has nearly doubled):
• Single Filers: the new standard deduction has risen to $12,000.
• Married Joint Filers: the new standard deduction has risen to $24,000.
6. Investor Business Assets: Business assets purchased new or used after September/2017 (equipment, furniture, fixtures, appliances, computers, etc), for real estate activities, have a 100% bonus depreciation deduction as an immediate write-off of the expense, rather than having to depreciate it over time.
7. Business Entertainment: These expenses are no longer tax deductible.
8. Estate Tax: The Estate Tax is applied to the transfer of property after someone dies. The amount exempt from the tax has been doubled from the $5.49M for individuals, and $10.98M for married couples.
9. Health Insurance: The penalization for not having health insurance has been eliminated. The Congressional Budget Office has predicted that as a result, 13 million fewer people will have insurance coverage by 2027, and premiums will go up by about 10% most years.
10. Personal Exemption: This deduction is now gone. Previously you could claim a personal exemption of $4,050 for: yourself; your spouse and each of your dependents, which would lower your taxable income.
11. The Child Tax Credit: This credit has been increased to $2,000 for children under 17. The entire credit can now be claimed by a single parent who makes up to $200,000, and married couples who make up to $400,000.
12. Non-Child Dependents: This can apply to a number of people that an adult supports, such as children over age 17, elderly parents, or adult children with a disability, to qualify for $500 temporary credit.
13. Medical Expenses: You can deduct various medical expenses when they add up to more than 7.5% of your adjusted gross income.
14. Alimony Payments: The person that writes the checks cannot deduct their alimony payments, if the Divorce or Separation paperwork is dated after 12/31/2018
15. Student Loan Interest: The $2,500 annual deduction for student loan interest will remain.
16. 529 Savings Accounts: These qualified tuition plans aren’t taxed, but could previously only be used towards college expenses. Now $10,000 can be distributed annually to cover the cost of sending a child to a Public, Private, or Religious elementary or secondary school.
17. The Deficit: The net number crunched by the nonpartisan Joint Committee On Taxation estimate that the Tax Reform will likely increase deficits by $1.46 trillion over the next decade.
18. Corporate Tax: Their rate is coming down to 21% from the previous 35%. The alternative minimum tax for corporations has been thrown out as well.
19. Tax Preparation Deduction: The deduction for having your taxes prepared by a professional, or for accounting software, has been eliminated.
20. Fewer Local Accountants: The increase of Standard Deductions will likely result in more people preparing their own personal tax returns. On the campaign trail Trump has said “I want to put H&R Block out of business”. Over time, there will likely be less local professional accountants offering their advice, and the community will likely suffer from this loss.
Mohamed T Gulamali is an expert in residential mortgages, and he has over a decade of experience within the financial field. He believes a well-informed client is a more comfortable client. For this reason, he goes above and beyond to help potential home owners by Publishing a free mortgage book “Mortgage Basics The Guidebook”, Publishing dozens of Financial Articles that get thousands of hits monthly, and Creating numerous Mortgage Videos speaking at Financial Literacy and Home Buyer Seminars.
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